[Edited Message Follows]
[Reason: Deleted erroneous line re proof of stake.]
I believe bitcoin etc. has a lot of uptake on the libertarian right. They all
want a universal currency that is self-validating and doesn't rely on any
compulsory form of central governance like regular money. A few years ago,
this was coupled with the fantasy of having a little unregulated thorium
reactor and a fleet of thorium cars on one's enormous "spread" in Texas. That
seems to have faded, but the basic settler-colonial paradigm remains evergreen
("a man goes out ... .")
An article on Investopedia (
https://www.investopedia.com/terms/b/blockchain.asp ) sums up the basics:
"KEY TAKEAWAYS
--------------
* Blockchain is a specific type of database.
* It differs from a typical database in the way it stores information;
blockchains store data in blocks that are then chained together.
* As new data comes in it is entered into a fresh block. Once the block is
filled with data it is chained onto the previous block, which makes the data
chained together in chronological order.
* Different types of information can be stored on a blockchain but the most
common use so far has been as a ledger for transactions.
* In Bitcoin’s case, blockchain is used in a decentralized way so that no
single person or group has control—rather, all users collectively retain
control.
* Decentralized blockchains are immutable, which means that the data entered is
irreversible. For Bitcoin, this means that transactions are permanently
recorded and viewable to anyone."
Bitcoin was created on blockchain to implement a completely decentralized cash
equivalent system. This rocked the world of libertarians and entrepreneurship
whores, leaving few dry bedsheets behind. Speculation followed and we are now
seeing a kind of tulipmania over this--one, two, many speculative "currencies,"
and widespread hopes of getting rich quick. Pant, pant, pant.
In order to guarantee the integrity of the currency and prevent double spending
and other forms of chicanery, new bitcoin must be created by a process called
"mining." Again Investopedia is helpful. Computers solve highly complex--and
humanly impossible math problems in order to do this. Again, Investopedia is
helpful:
"The result of bitcoin mining is twofold. First, when computers solve these
complex math problems on the bitcoin network, they produce new bitcoin (not
unlike when a mining operation extracts gold from the ground). And second, by
solving computational math problems, bitcoin miners make the bitcoin payment
network trustworthy and secure by verifying its transaction information."
Miners receive Bitcoin as a reward for their computers' labors. Early on,
anyone could mine Bitcoin on an ordinary PC. But as the volume of Bitcoin has
increased, this has become practically impossible. So much computing power is
now required to mine Bitcoin and process transactions that the
fossil-fuel-based electricity requirements alone now pose a major environmental
threat. Bitcoin mining alone is said to use more energy than some whole
countries (eg Argentina). Various initiatives are under way to reduce the
energy demand and/or shift it to "Greener" sources, but AFAIK it continues to
grow for the present.
There are numerous "alternative" electronic currency initiatives, many of which
rely on the less energy-intensive Proof of Stake (PoS--and yes, that is how
they abbreviate it) mining algorithm, as opposed to Bitcoin's Proof of Work
(PoW) method. Per Investopedia (
https://www.investopedia.com/terms/b/blockchain.asp ) :
"The proof of stake (PoS) seeks to address this issue by attributing mining
power to the proportion of coins held by a miner. This way, instead of
utilizing energy to answer PoW puzzles, a PoS miner is limited to mining a
percentage of transactions that is reflective of their ownership stake. For
instance, a miner who owns 3% of the coins available can theoretically mine
only 3% of the blocks.'
This only scratches the surface. I hope it proves useful The Investopedia
articles are written from a business (i.e. functional rather than technical)
perspective and IMO constitute a good introduction. But as far as the
political significance is concerned, I think cmrd. Meeropol has hit the nail on
the head. What we are seeing appears to be a classic speculative frenzy
almost without reference to any underlying productive investment, although
blockchain technology seems to be here to stay.
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